Taxi Driver Online

Have we any updates on ‘digital platforms’ and exactly who the new legislations will affect ?

The LPHCA, NPHTA and Eazitax engage with the HMRC Digital Platforms Team and DfT on Digital Platform Reporting Rules

A Joint Statement

There has been some concern in our industry about our place in this legislation, so this week, Steve Wright of the Licensed Private Hire Car Association (LPHCA), David Lawrie of the National Private Hire & Taxi Association (NPHTA), and Gary Jacobs of Eazitax (Industry Accountants) met with representatives from the HMRC Digital Platforms Team and the Department for Transport to discuss the new reporting rules for digital platforms.

The meeting with HMRC was organised by The LPHCA as the second major collaborative project in recent weeks with the NPHTA alongside Eazitax, whom we both had worked closely with on other HMRC issues.

Together, we emphasised the need for clarity and understanding for taxi & private hire vehicle operators and industry software suppliers regarding their obligations under these regulations.

The HMRC Team provided an overview of the OECD's reporting rules, which require platform operators to report seller information to HMRC starting this year. However, it was clarified that these rules are only for those captured by the legislation.

We raised concerns regarding the confusion surrounding the definitions of operators and platforms, as well as the lack of clear guidance from HMRC.

We highlighted that there was widespread misunderstanding among operators about their reporting responsibilities, if any! We emphasised the need for clearer communication and definitions to facilitate compliance, particularly for those with limited resources.

The HMRC team were given clear examples of where the definitions were not clear to our trade and all participants expressed a desire for collaboration. It was made clear that penalties would only be applied to those who are aware that they are captured by the legislation and choose not to comply. So those who are genuinely unsure as to their obligations and require help will get it, and not be penalised.

A proposal was made for us to outline various scenarios and definitions related to the reporting rules, with the aim of improving understanding and cooperation between HMRC and the private hire sector. We will, therefore, be working further with HMRC but reporting to our members and the wider trade as we move forward.

We pointed out that, from what we could gather, the majority of our industry would not be affected by this new requirement, as it seems to be more aimed at “platforms” such as Ebay, Etsy, Amazon, AIrbnb, etc, where an item or a service is advertised and paid for on the platform only, the platform then passing payment on to the seller, which did not fit into the majority of Private Hire Operators working models.

HMRC were extremely receptive to our comments and recognised that with the combined input from the two largest industry representative bodies, it would indeed be highly beneficial to work together towards clarity.

We pointed out that, from what we could gather, the majority of our industry would not be affected by this new requirement, as it seems to be more aimed at “platforms” such as Ebay, Etsy, Amazon, AIrbnb, etc, where an item or a service is advertised and paid for on the platform only, the platform then passing payment on to the seller, which did not fit into the majority of Private Hire Operators working models.

Although private and public hire are
longstanding trades, in recent years, more and
more people have opted for flexible work such
as ridesharing and food delivery. This is referred
to in the media as the ‘gig economy.’
So, governments have had to address tax
challenges posed by this kind of work. The UK
government has introduced new legislation that
requires ‘online platforms’ to directly report the
income details of their sellers (drivers in this
case) to HMRC.[...]

Let’s explore this legislation’s impact on drivers
and the platforms they work for.

HMRC mandates that digital platforms
operating in the UK must report income details
of their sellers to HMRC. This information
includes earnings, the number of journeys or
deliveries completed and expenses incurred by
the drivers. This legislation aims to improve tax
compliance in the gig economy, ensuring
drivers pay the right amount of tax on their
income. However, this is only for what’s called a
digital platform, not necessarily private hire
operators.

• Most of the platforms covered by the new legislation are open marketplaces that match sellers to buyers. Examples are Booking.com, eBay, Etsy as well as ridesharing apps such Uber, Bolt, OLA and Freenow.

• Private hire tech exists in a different space because it pairs operators with drivers, who are already regulated through their relationship with the licensing authority.

However, this is only for what’s called a
digital platform, not necessarily private hire
operators.

What does this mean for traditional private
hire and taxi operators and fleets?

• The definition of a digital platform has yet to
be made clear to us in the ground transport
industry.

• One thing to understand is that operators and
despatch software are not necessarily
included in the legislation.

I’m assuming the numbers mentioned are gross, so you would have to take at least 25% of that, before you take off your normal running costs.

If you work as a private hire driver, you're self-employed for Income Tax purposes.

Oh, really?

I doubt many private hire drivers are employees, but I'm quite sure some are. Maybe even employed by a regular on here...

“Dynamic pricing is there to create the highest likelihood for a trip to happen by making pricing attractive for both riders and for drivers. Since both rider and driver fares adjust, the amount that Uber keeps from the rider fare varies from trip to trip, from virtually zero to almost half - but this quickly averages out. We encourage drivers to look at their weekly summary to see how much Uber kept from their week’s fares - we often find that drivers are pleasantly surprised when they see the average amount over the week’s trips. We’re absolutely clear that the majority of fares go where they belong: in drivers’ pockets.”